Summary

In this thought-provoking analysis of the economics of personal decisions, Robert Frank chronicles the new boom of conspicuous consumption and exposes the hidden prices paid for ever more elaborate houses, cars and lifestyles. He explains how a simple change in incentives would lead to a longer, healthier and more satisfying life.

Booklist Review

One of the biggest political arguments of the last few years has been whether the ballooning national deficit was worth the economic boom of the Reagan years. As the government overspent, its citizens did as well, as people everywhere pushed the limits of their bank accounts and bankruptcy declarations skyrocketed. Frank (The Winner-Take-All Society, 1995) claims that Americans are overspending for scores of items in an attempt to keep up with the Joneses. One chapter title says it all: "Does Money Buy Happiness?" The answer seems to be a resounding "No," and conspicuous consumption, once the byword of the freewheeling 1980s, is now losing out to savers who practice thrift. Frank doesn't necessarily introduce economic concepts that are unknown, but with a straightforward style he succeeds in breaking down the whys of the decline of spending. He suggests that ultimately we need to act as a group to curb spending by imposing a progressive consumption tax to hold down expenditures on luxury items. --Joe Collins

Publisher's Weekly Review

Frank, a professor of economics at Cornell and the author of The Winner-Take-All Society, castigates Americans for wasteful spending and offers reasonable, if unexciting, policy proposals to remedy the problem. Our homes, cars and even our watches are flashier than ever. But although the rich have the money to indulge their whims, the rest of us finance our spending sprees either by decreased personal savings or by increased debt: Frank reports that total household debt grew from 56% of disposable income in 1983 to an astonishing 81% by the beginning of 1995. Most economists accept that conspicuous consumption merely reflects Adam Smith's dictum that the sum of individuals seeking their own interest adds up to the greatest good for all. But Frank argues that our notions of self-interest are skewed, that all this getting and spending doesn't even make us happy (if your neighbor didn't buy the new Lexus, you wouldn't feel the need for the newer Beemer, and you'd both work less and spend more time with the kids). The problem, Frank believes, is that American society has a glut of individual incentives and a dearth of group incentives. To protect us from our greedier selves, Frank lobbies for a tax exemption for savings and a progressive consumption tax. If Americans spent less on luxury items, he writes, there would be more money available "to restore our long neglected public infrastructure and repair our tattered social safety net." Frank's diagnosis of American luxury fever is hard to dispute, but his remedies, sensible in the abstract, take insufficient account of the political and cultural obstacles that need to be overcome to implement them. (Feb.) (c) Copyright PWxyz, LLC. All rights reserved

Choice Review

With coauthor Philip Cook in The Winner-Take-All Society (CH, Jan'96), and now in Luxury Fever, Frank (Cornell Univ.) takes on the rich. Four years ago he decried the widening inequality of income in the US and proposed remedies, mainly taxing the winners. This time, he argues that increased income and consumption provide few tangible or psychological benefits to the big spenders, so he proposes a remedy--raise their taxes and channel spending in more socially desirable directions. The generic issue--the relationship between money (or consumption) and happiness--is not new to economists or other social scientists. Veblen's 19th-century "conspicuous consumption," and mid- to late-20th century recastings by Staffan Burenstam Linder (The Harried Leisure Class, 1970) and others cover similar ground. Juliet Schor's recent The Overspent American (1998) is another complementary attack. While thought-provoking and readable, Fever ignores alternative explanations, e.g., maybe people actually enjoy their work and willingly put in longer hours (or maybe Frank just ignores lifetime hours, which have declined steadily). Selective data, coupled with a distrust of market outcomes and an uncritical view of government alternatives, makes the author's case seem compelling. It is not. The book should be read critically, not swallowed whole. All levels. A. R. Sanderson University of Chicago